Via Westpac, their economists initial thoughts on the RBNZ decisions this morning (in brief, bolding mine):

  • Guidance was a slightly dovish surprise to the fx and interest rate markets
  • The key guidance paragraph at the bottom of the press release had one notable dovish change from September’s. The RBNZ completely omitted September’s explicit intention to tighten further (which then read “Nevertheless, we expect some further policy tightening will be necessary”.). This omission will further fuel the skeptics in the market who believe the RBNZ will not tighten any further.
  • Previous warning about the high NZD exchange rate was repeated … “current level remains unjustified and unsustainable … We expect a further significant depreciation.”

On the currency, their view:

  • We expect some stability around 0.7800, given its large FOMC-induced fall earlier, but during the days ahead it risks falling towards 0.7709 major support. AUD/NZD rose from 1.1245 to 1.1302, and after some consolidation could extend towards 1.1310 – the September high.